USD Trading Outlook
AUD/USD Europe pushed AUD/USD lower from Asia's high due to offers touted in the 0.8820-50 zone and a bout of USD strength. The pair slide from near 0.8820 & sat near 0.8775 at NY's open. Early action saw gains as the USD began to weaken. The rise accelerated a bit and hit 0.8806 as US bond yields dropped. That rally was sold though as JPY strength permeated the market. AUD/JPY dropped from above 95.40 towards 94.80. AUD/USD went on to hit a NY low of 0.8765. Buyers emerged though as the USD stayed weak but overall risk sentiment improved as stocks recouped losses and went positive. AUD/USD climbed, broke Asia's high,pierced the 10-DMA and rallied towards 0.8830 late in the day. The l-t trend for the pair remains down but bears should proceed with caution. The bullish hammer on Oct 1 saw upside follow through today while the day/week RSIs diverge. The bounce off key 0.8660/70 support is also a warning. A further squeeze cannot be ruled out. If NFP is weak tomorrow a test of 0.8950/0.9000 may be due.
AUD/USD Most of the gains posted after AUD/USD bounced off big support in the 0.8660/70 zone were eroded as NY got going. Europe dropped the pair from near 0.8730 and it sat near 0.8695 into NY's open. The pair looked set to drop further as ADP beats forecasts but the market ignored the data and focused on US bond yields instead. Yields dropped quickly shortly after the data. Broad base USD sales took hold and AUD/USD again tested near 0.8730. The level broke as ISM and construction spending came in below estimates. The pair hit a NY high of 0.8748. The pair then dived down to 0.8705. An article by the Herald Sun's McCrann stating the retail sales data could justify an RBA cut as well as a sinking NZD due to weak milk prices seemed to be the culprits to lower the pair. The dip didn't last long though as US yields and the USD remained under pressure. AUD/USD sat just below 0.8740 late in the day. Traders now look to Oz Aug. trade data & building permits for their cue in Asia. Weak results should see the pair make a move back to the 0.8660/70 area.
AUD/USD Broad based USD strength in Europe's morning saw most of Asia's gains erased. The pair fell from the day's 0.8768 high & sat near 0.8720 at Ny's open. Further USD gains early on saw NY hit a low of 0.8706 but no further losses were possible. EUR/AUD's plunge from above 1.4585 towards 1.4420 and some give backs in USD's rally combined with some soft US econ data to allow AUD/USD a lift from the NY low. The rise saw the pair near 0.8760. Short covering into tonight's Oz retail sales & China's Sep NBS Mfg- PMI likely aided the lift. Late in the day the pair sat just below 0.8760. The market is positioned short so topside surprises to the Oz & China data later may see a decent squeeze. Oversold day/week RSIs need unwinding and may exacerbate a squeeze should one take hold. If the data is rotten then the 2014 low is likely back in play.
AUD/USD A profit taking bounce begun in Europe's morning faltered a bit in NY. AUD/USD sat just above 0.8740 as NY got going. The pair slid from NY's open towards 0.8710. AUD/JPY's drop from above 95.60 towards 93.25 and AUD/NZD's slip below 1.1220 in early NY trading seemed to be the culprits driving AUD/USD lower. The dip for AUD/USD was short lived though as US pending home sales were soft and the Fed's Evans stated USD strength will be taken into account in the way it affects trade & inflation. AUD/USD rebounded and hit a NY high of 0.8749. Resting offers from Asian names capped and the pair slid down. Late in the day the pair sat just below 0.8730. There is only second tier Oz data due later so traders look to China's September HSBC Mfg-PMI. The prior reading was 50.2. A weak result likely sees AUD/USD get hit and the move may be exacerbated as tensions in Hong Kong may be increasing. A scenario such as that might see AUD/USD test the 2014 low at 0.8660.
AUD/USD After the pair broke the 0.8750 barrier profit taking kicked in. Short covering in Europe's morning took the pair from 0.8748 to 0.8803 before it slid towards 0.8795 into NY's open. Early NY saw a rally to 0.8800 but fresh offers camped in that area combined with the USD's power run higher capped the lift. The pair then spent most of NY's session drifting lower. A NY low of 0.8755 was all bears could muster though. AUD/NZD's lift above 1.1140 and EUR/AUD's slide to 1.4455/60 likely prevented further AUD losses vs. the USD. Late in the day AUD/USD sat near 0.8765. Bears hold control of AUD/USD. The weekly close below the 76.4 Fib of 0.8660-0.9505 combined with bear biased day/week RSIs and narrower yield spreads suggest a test of the 2014 low at 0.8660 is due. Daily lows of Feb. 3 & 4 at 0.8730 need to be overcome first. Once cleared only option barrier interest will provide some support but it's unlikely to stem the l-t trend.
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